Delegated Legislation Committee
Draft Social Security Co-ordination (Revocation of Retained Direct EU Legislation and Related Amendments) (EU Exit) Regulations 2020
The Committee consisted of the following Members:
Chair: James Gray
† Afolami, Bim (Hitchin and Harpenden) (Con)
† Anderson, Stuart (Wolverhampton South West) (Con)
Antoniazzi, Tonia (Gower) (Lab)
† Buck, Ms Karen (Westminster North) (Lab)
† Clark, Feryal (Enfield North) (Lab)
† Davies, Gareth (Grantham and Stamford) (Con)
† Docherty, Leo (Aldershot) (Con)
Fletcher, Mark (Bolsover) (Con)
† Gideon, Jo (Stoke-on-Trent Central) (Con)
† Gullis, Jonathan (Stoke-on-Trent North) (Con)
† Kawczynski, Daniel (Shrewsbury and Atcham) (Con)
† Newlands, Gavin (Paisley and Renfrewshire North) (SNP)
Rees, Christina (Neath) (Lab/Co-op)
† Richardson, Angela (Guildford) (Con)
Sharma, Mr Virendra (Ealing, Southall) (Lab)
† Tomlinson, Justin (Minister for Disabled People, Health and Work)
Winter, Beth (Cynon Valley) (Lab)
Yohanna Sallberg, Committee Clerk
† attended the Committee
First Delegated Legislation Committee
Monday 7 December 2020
[James Gray in the Chair]
Draft Social Security Co-ordination (Revocation of Retained Direct EU Legislation and Related Amendments) (EU Exit) Regulations 2020
I beg to move,
That the Committee has considered the draft Social Security Co-ordination (Revocation of Retained Direct EU Legislation and Related Amendments) (EU Exit) Regulations 2020.
It is a pleasure to see you in the Chair again, Mr Gray, and to serve under Wiltshire’s finest. The draft regulations, which concern policy areas within my Department and Her Majesty’s Treasury, and which apply UK-wide, were laid before both Houses on 16 November. They are required to clear the way for the legislation that will implement our new system of social security co-ordination with the EU, European economic area states and Switzerland.
The current EU SSC—social security co-ordination—regulations operate to facilitate the EU’s free movement rules. They ensure that individuals pay social security contributions in only one member state at a time, set out which member state is responsible for the payment of social security benefits, require the export of some benefits to claimants resident in the EU, and provide for the aggregation of social security contributions when claiming certain benefits and the state pension. The rules require equal treatment for citizens across the EU, overriding any domestic legislation, and have continued to apply to the UK throughout the transition period. As hon. Members will be aware, the Immigration and Social Security Co-ordination (EU Withdrawal) Act 2020 came into force on 11 November, and section 6 of the Act provides a power to modify the SSC regulations, which have been retained in UK law.
Before I go into the draft regulations in detail, I will provide some further detail on the context in which they are being made. The system of social security co-ordination across the EU relies on reciprocal arrangements. None the less, the unilateral provisions retained and fixed under the European Union (Withdrawal) Act 2018 in that area would have provided a measure of short-term protection for citizens, to the extent possible, in the event that there were no withdrawal agreement in place. Now that the UK has left the EU with a withdrawal agreement, those retained provisions are not necessary. Citizens who are covered by the withdrawal agreement and related agreements with the EEA and Switzerland will be unaffected by the regulations for as long as they remain covered by those agreements. Arrangements in this area for UK and Irish nationals who move between the UK and Ireland will also continue unchanged, under a recent reciprocal agreement with Ireland.
The Government are negotiating future arrangements with the EU, similar in kind to the UK’s social security relationships with nations outside the EU. Such agreements are not, of course, as extensive in coverage as is required under the EU SSC regulations, which operate to facilitate free movement, as I have set out. That means that there will be changes in social security co-ordination policy with the EU from the end of the transition period, regardless of the outcome of the negotiations. The Government have been clear about that, including during the passage of the ISSC Act and in public communications.
Our new system will support workers who come into the UK under the new immigration system who are contributing to our economy. As the Committee will be aware, negotiations with the EU are at a very advanced stage. The Government’s position is that new rules should take effect from the end of the transition period, whether or not there is a future agreement. We still hope to secure a future agreement with the EU, including reciprocal provisions on the state pension and national insurance contributions. Good progress is being made, but of course wider negotiations are ongoing, and we have been preparing for all outcomes. The draft regulations are a core part of our legislative preparation, and will stand whatever the outcome.
We are also in discussions on future social security co-ordination rules with a number of EEA states and Switzerland. The absence of a future agreement with the EU would not preclude agreements with any EEA states or Switzerland from being concluded.
I will summarise the draft regulations. Part 1 sets out that the regulations come into force at the end of the transition period, apart from some of the amendments being remade in part 4, which will come into force on the day after the regulations are made. Part 2 revokes the EU SSC regulations retained under section 3 of the European Union (Withdrawal) Act 2018 and those unilateral fixing statutory instruments made under section 8 of that Act. The fixing SIs were, as I said, brought forward for a scenario in which the UK did not leave the EU with a deal, and they would have enabled the UK to operate some of the retained SSC regulations unilaterally, as far as possible. That means that the rules for individuals not covered by the withdrawal agreement and who move between the UK and the EU, the EEA states and Switzerland after the end of the transition period will be determined by any new international agreements that are in place—be they with the EU or with individual countries, such as that which the UK has signed with Ireland.
Where there is no provision in any international agreement or no international agreement, the relevant domestic law in each country will apply. In respect of UK benefits, this means the UK will no longer export child benefit to children living in the EU, with the exception of Ireland, delivering on the manifesto commitment. As the Government have set out previously, we expect that arrangements in relation to, but not limited to, disability and unemployment benefits will be less comprehensive in all scenarios, reflecting long-standing UK policy in that area of EU requirements. As we have also set out, industrial injury disability benefit is payable worldwide and will therefore be payable in the EU, EEA and Switzerland in all scenarios.
In respect of national insurance contributions, the change means that, where no reciprocal agreement applies, the rules on the payment of national insurance contributions for individuals moving between the UK and the EU, EEA and Switzerland will be the same as the rules for the rest of the world. That arrangement will ensure a consistent approach to the EU and the rest of the world by making sure that workers and employers have to follow only a single set of rules when moving between the UK and another country. That means that employees and their employers cannot be required to pay social security contributions in more than one country at the same time after someone’s first year overseas.
The regulations will, however, make four limited savings from the general revocation of the retained SSC regulations at part 3. First, they will save the retained SSC regulations relating to the co-ordination of benefits in kind, namely healthcare, which is a policy competence of the Department of Health and Social Care. The Department has made separate secondary legislation in respect of the reciprocal healthcare aspects of the retained SSC regulations.
Secondly, the regulations save the existing debt recovery provisions, which will enable the UK to collect overpaid Her Majesty’s Revenue and Customs benefits and social security contributions on the behalf of a foreign social security authority where the individual or the employer is present in the UK. This saving will be made so that the provisions are available only where the UK has accepted a debt recovery obligation from a foreign authority on a reciprocal basis as part of an international social security co-ordination agreement, such as that with Ireland.
Thirdly, the regulations save the retained SSC regulations to the extent necessary to provide for continued operation of the agreement on social security between the Governments of the UK and Gibraltar. It is the intention of both Governments to agree a new relationship not based on the EU SSC regulations. Once that has been implemented, this saving will no longer be required and will be revoked a later date.
Fourthly, the regulations save provisions relating to the aggregation and uprating of the state pension. This saving would not be needed should the UK reach a future agreement with the EU, EEA states and Switzerland. However, in the absence of all such agreements being in place by the end of the transition period, the saving will provide for continued state pension aggregation and uprating in the EU, EEA states and Switzerland up to the end of the financial year 2021-22. In the absence of a future agreement with the EU, the UK would seek to put in place reciprocal arrangements on social security with individual EU countries instead, some of which the UK had agreements with prior to our or their accession to the EU.
Even where such negotiations are progressing well, it may well be that the saving is needed for a short period beyond March 2022 in order to finalise and implement bilateral agreements. The saving is therefore not time-limited; it is, however, a strictly interim measure targeted at those who move to the EU, the EEA or Switzerland after the transition period while future arrangements are put on a reciprocal footing.
Part 4 makes related amendments to other EU exit legislation, including by bringing forward the day on which amendments will be made to section 179 of the Social Security Administration Act 1992 and section 155 of the Social Security Administration (Northern Ireland) Act 1992. Those amendments were previously made by the Social Security (Amendment) (EU Exit) Regulations 2019 and the Social Security (Amendment) (Northern Ireland) (EU Exit) Regulations 2019, which are not revoked by the draft regulations. The amendments were otherwise due to come into effect at the end of the transition period, and will provide the option of delivering a future agreement with the EU on social security co-ordination through an Order in Council before the end of the transition period, should that be needed.
Although the UK has left the EU, we are not leaving the European convention on human rights. In my view, the provisions of the draft regulations are compatible with the convention.
In summary, the draft regulations, which are technical in nature, will make changes to prepare the statute book for the end of the transition period, particularly in relation to preventing the unilateral export of benefits. They will deliver on our manifesto commitment to prevent people from claiming child benefit for children living outside the UK, and they will ensure that the Government have the option to make a future social security co-ordination agreement with the EU through an Order in Council before the end of the transition period, should that be needed. I commend them to the Committee.
It is a pleasure to serve under your chairmanship this afternoon, Mr Gray. As I think is reasonably obvious, the Opposition will not oppose the draft regulations. Social security with the EU and EEA countries will be vital post Brexit, and the temporary unilateral measures that are ended by the regulations are clearly not a basis for that ongoing co-ordination. We support bringing forward the changes to the Social Security Administration Act 1992 to the extent that that facilitates agreement on ongoing social security co-ordination. However, I have to note the absurdity of the circumstances under which we are discussing the statutory instrument. It is now 7 December 2020. On the 31st, the transition period will come to an end, and we still do not know whether there will be a deal between the UK and the EU—
Order. The hon. Lady’s remarks must be strictly in the context of the draft SI.
—let alone whether that deal will include social security co-ordination or whether it will replace the regulations being ended by the draft SI. It is testimony to the Government’s entire approach to the negotiations that the draft instrument has come before the Committee so late in the day and under such continuing uncertainty. The time to discuss these measures is when a deal has been secured and the future framework of co-ordination that will replace the regulations that are being ended is a known quantity, but that is not the situation that we are in.
We therefore need clarification of the implications of the draft regulations in the event of a deal and in the event of no deal. First, I am sure that the Minister will be happy to confirm that in the event of no deal, nothing in the draft regulations will in any way alter the social security protections afforded to resident EU, EEA or European Free Trade Association citizens under the withdrawal agreement.
Secondly, can the Minister clarify the implications of the draft regulations for EU citizens living in the UK who are not covered with the withdrawal agreement provisions, in relation to such matters as accidents at work, maternity pay, state pension contributions, access to the NHS and benefit entitlement? Will they enter a legal no man’s land until future reciprocal agreements are negotiated? What are the implications for UK social security expenditure in the event of no deal?
The draft regulations will be made under the Immigration and Social Security Co-ordination (EU Withdrawal) Act 2020. The Home Office’s explanatory notes on the Bill note:
“The power to make regulations under Part 2 of the Bill has the potential to be used in a way that could change the cost to the public sector in terms of social security co-ordination. It is not possible to quantify precisely what those costs may be at this stage, but there is the potential for costs that are more than merely notional.”
Why have the Government not provided an impact assessment to enable us to assess that?
On part 4 of the draft regulations, which brings forward the date on which changes to the Social Security Administration Act 1992 come into effect, the explanatory memorandum states that
“subject to the outcome of the negotiations with the EU, and the details of any agreement, it may be necessary to use the powers in section 179 of the SSAA 1992 and section 155 of the SSAA(NI) Act 1992 to make a reciprocal agreement with the EU prior to the end of the transition period. This instrument brings forward the changes as a precaution given that the amendments in the Social Security (Amendment) (EU Exit) Regulations 2019 and the Social Security (Amendment) (Northern Ireland) (EU Exit) Regulations 2019 only take effect from the end of the transition period, as a consequence of the EU (Withdrawal Agreement) Act 2020.”
I read this as saying that if there is to be an agreement on social security as part of a deal, the necessary amendments to the 1992 legislation will need to already have come into force beforehand. The question is, have the Government only just realised this? Have they have been negotiating on social security all year without noticing that they did not have the powers to do a deal until after the transition period? Some clarity on this important point would be welcome.
It is a pleasure to see a son of Glasgow in the Chair, Mr Gray. I will not detain the Committee for particularly long, and will not be forcing a vote on today’s proceedings either, but I want to put a couple of quick points on the record.
The explanatory memorandum states:
“The territorial application of this instrument is the entire United Kingdom. The changes being made to DWP areas of social security policy, which is transferred in Northern Ireland and partially devolved in Scotland, are in this context subject to the foreign affairs reservation.”
However, it is our view that the revocation of retained EU law that has effect in respect of devolved social security benefits is within the legislative competence of the Scottish Parliament. The DWP has obviously made these regulations with UK-wide extent, but with no carve-out whatsoever for devolved social security matters, on the basis that it considers the draft regulations to relate entirely to reserved matters, by reference to the foreign affairs reservation. In our view, the UK Government have construed the foreign affairs reservation in part I of schedule 5 to the Scotland Act 1998 far too widely. The modification, including repeal, of retained EU law on social security co-ordination, insofar as it has effect in respect of benefits, is devolved by the Scotland Act 2016. It is quite clearly a devolved matter.
I ask the Minister to confirm whether these powers are indeed fully devolved or not, but sadly the United Kingdom Internal Markets Bill, which runs roughshod over the devolution settlement, will make that point moot, as every aspect of devolved Government is undermined and could be overruled. It therefore follows—before I veer too far off course, Mr Gray—that these draft regulations will be ultra vires and thus ineffective in relation to devolved benefits.
It was only on 16 November, three weeks ago, as the UK Government laid their regulations, that the need for a Scottish statutory instrument became clear. Failing an agreed approach, Scottish Ministers were left with no choice but to table an SSI, which they have now done. The outcome is undesirable, as it will result in UK and Scottish legislation seeking to achieve the same result in relation to devolved benefits. Not only does that mean less legal clarity; it is a further example of the UK Government ignoring the needs and wishes of a democratically elected devolved Government. No disrespect to the Minister, who I have met with before, but I feel that the approach thus far has been high-handed and arrogant, which has increasingly frustrated Scottish Unionists, even those from his own party.
I thank the two hon. Members for commenting. First, on the timing, to be clear, this is a technical rectification, as part of the amendments in part 4, so that was always going to be the case. Although it is late in the transition period, good progress has been made in this area and we hope to get the deal over the line. EU negotiations are renowned for going down to the wire, and the sticking points are well documented. We do not take it for granted that there will be an agreement, and the Government are prepared for all outcomes and have been communicating to citizens the importance of being prepared for rules in this area to change in all scenarios.
These affirmative-resolution regulations offer an opportunity for the House to approve the changes we are making in social security co-ordination before the end of the transition period. It would clearly not be appropriate to continue the unilateral export of benefits that are only paid overseas due to EU rules after we have left the EU and the transition period in the absence of reciprocal provisions. The principle of reciprocity is widely recognised as the basis on which international agreements on social security are operated. Therefore, the Government would seek to put in place reciprocal agreements with member states swiftly if no agreement can be reached with the EU.
Clearly, some member states attract a higher proportion of UK state pensioners and UK-based employees than others. The UK previously had 20 bilateral agreements with the EU, EEA states and Switzerland, including reciprocal provisions on the state pension and national insurance contributions—priority areas for my Department and HMRC that cannot be effectively operated on a unilateral basis.
The Government have committed and remain committed to publishing an updated impact assessment once the outcome of negotiations is known. The relevant people covered by the withdrawal agreement are not impacted by this instrument. The measure does not impose any costs on businesses and ensures, once SSC rules cease to apply between the UK and the EU, that businesses can apply the standard rest-of-the-world rules for national insurance where no reciprocal agreements is in place.
Citizens do not need to have moved by the end of the transition period, and that has been consistently clear in communications. Those who move after the transition period and are subject to new social security rules may also be subject to new immigration residency requirements imposed by the country in question. My Department has been undertaking a communications campaign in this area since before the summer. Guidance is included in the gov.uk transition checker tool for anyone thinking of moving to the EU, EEA or Switzerland. In November, we launched advertising on post office screens in more than 250 locations across all four nations of the UK targeting those who may be undertaking activity in readiness for a move to the EU, EEA or Switzerland.
My Department is ready to implement changes from 1 January and has been preparing for a variety of outcomes while working closely and collaboratively across Government with other Departments. We have new processes in place to ensure that the right rules are applied to the right customers. While DWP policy is transferred in Northern Ireland and partially devolved in Scotland, the Government’s position is that the foreign affairs reservation applies in this context and the revocations are UK wide, and I have exchanged written correspondence with the relevant Scottish Minister on that specific point.
The regulations are an essential part of the legislative programme and have been laid in preparation for the end of the transition period as we reset our relationship with the EU. Not proceeding with this legislation would result in the UK unilaterally operating EU rules after the end of the transition period, regardless of the outcome of the negotiations. That would be undesirable for the reasons I set out in my opening speech, and I commend the regulations to the Committee.
Question put and agreed to.
Public Health (Coronavirus) (Protection From Eviction and Taking Control of Goods) (England) Regulations 2020
The Committee consisted of the following Members:
Chair: Sir David Amess
Cadbury, Ruth (Brentford and Isleworth) (Lab)
† Chalk, Alex (Parliamentary Under-Secretary of State for Justice)
† Charalambous, Bambos (Enfield, Southgate) (Lab)
† Clarkson, Chris (Heywood and Middleton) (Con)
† Crosbie, Virginia (Ynys Môn) (Con)
† Fuller, Richard (North East Bedfordshire) (Con)
Hillier, Meg (Hackney South and Shoreditch) (Lab/Co-op)
† Jones, Fay (Brecon and Radnorshire) (Con)
† Kyle, Peter (Hove) (Lab)
McDonnell, John (Hayes and Harlington) (Lab)
Millar, Robin (Aberconwy) (Con)
Miller, Mrs Maria (Basingstoke) (Con)
Osamor, Kate (Edmonton) (Lab/Co-op)
† Pursglove, Tom (Corby) (Con)
† Roberts, Rob (Delyn) (Con)
Whitley, Mick (Birkenhead) (Lab)
† Wood, Mike (Dudley South) (Con)
Chloe Freema, Committee Clerk
† attended the Committee
Second Delegated Legislation Committee
Monday 7 December 2020
[Sir David Amess in the Chair]
Public Health (Coronavirus) (Protection from Eviction and Taking Control of Goods) (England) Regulations 2020
I beg to move,
That the Committee has considered the Public Health (Coronavirus) (Protection from Eviction and Taking Control of Goods) (England) Regulations 2020 (S.I., 2020, No. 1290).
It is, as always, a pleasure to serve under your chairmanship, Sir David. The statutory instrument prevents enforcement agents—bailiffs, in plain English—from entering residential premises in England to execute a writ or warrant of possession until 11 January, except in the most serious circumstances.
The purpose of the measure is to protect public health by preventing people from being evicted from their homes by enforcement agents at a time when the risk of virus transmission is high and when local authorities and NHS services are typically under additional strain over the Christmas period. The instrument builds on the Government’s previous guidance on enforcement activity during the national lockdown in England, which was introduced by the Health Protection (Coronavirus, Restrictions) (All Tiers) (England) Regulations 2020, and on the intention to have a winter pause on evictions, which the Government announced on 10 September. The instrument before the Committee also prevented enforcement agents from entering residential properties to take control of goods during the national lockdown that ended on 2 December. It applies to enforcement action in England only.
The Government took unprecedented action to ensure that renters were protected from eviction at the height of the coronavirus pandemic, including by providing significant financial support and agreeing with the courts to use powers relating to court procedure to stay possession proceedings for a total of six months, until 20 September. That stay could only ever be temporary, however; the civil justice system and the rules that underpin it must be accessible, fair and efficient for tenants and landlords alike.
Ahead of the end of the stay on possession cases in the courts, the Government put in place a number of measures to manage the resumption of cases carefully, so that the courts were not overwhelmed and could make decisions; so that the most vulnerable could get the help and support they needed; and, in particular, so that tenants could have access to legal advice and support. The Government also worked with the judiciary and others to put in place new court arrangements to ensure appropriate support to all parties. Those court arrangements are in place and are working well, and I pay tribute to the working group convened by the Master of the Rolls and chaired by Mr Justice Knowles for the key role that it has played.
In addition, the Government took legislative action. The Minister for Housing laid a statutory instrument on 28 August to amend schedule 29 to the Coronavirus Act 2020 to require landlords to provide tenants with six months’ notice in all but the most serious cases. That approach ensures that tenants will remain safe and have additional time to find new accommodation, while empowering landlords to take action where necessary—if a tenant’s antisocial behaviour is severely affecting their neighbours’ quality of life, for example.
We have also taken some targeted action on the enforcement of evictions to protect public health during the extraordinary circumstances of the coronavirus pandemic. In September, guidance was issued to bailiffs to request that the enforcement of possession orders did not proceed in areas where local lockdown regulations restricted gatherings in residential properties, to prevent tenants being forced out of their homes at an unsettling time in areas where public health risks could be greater.
The Government also announced in September that we would take steps to prevent eviction action taking place over the Christmas period, ensuring that vulnerable tenants are not forced from their homes at a time when public and local authorities may be dealing with the usual level of increased demand on services. Bailiffs were issued guidance that they should not enforce writs or warrants of possession, other than in the most serious circumstances, between 11 December and 11 January, during the winter pause I mentioned. That is the necessary context—forgive me for setting it out in some detail, Sir David, but it is important.
At the beginning of November, following the introduction of the Health Protection (Coronavirus, Restrictions) (England) (No. 4) Regulations 2020, enforcement agents were asked not to enforce evictions nationally at a time when the risk of transmitting the virus was high and a number of significant restrictions were in force. As the national restrictions were set to end just before the end of the national winter pause, the Government decided that it was appropriate to build on the guidance not to enforce evictions in England during that time with the legislative measure before the Committee. We therefore laid this instrument in Parliament on 16 November, to come into force on 17 November. We were able to do so because it was an urgent matter taken under the public health legislation. Today’s proceedings are now required to ensure that this made affirmative legislation continues to have effect.
The instrument is consistent with the policy that the Government have adopted since the start of the pandemic. It aims to strike a balance between prioritising public health and supporting the most vulnerable, while ensuring that landlords can access and exercise their right to justice in the most serious cases. For that reason, the instrument contains some limited exemptions from the ban on the enforcement of evictions. These exceptions relate to circumstances where the Government feel that the health risk is lower, or the competing interests of preventing harm to third parties or taking action against egregious behaviour are sufficient to outweigh the public health risks in enforcing eviction.
The instrument provides the following exemptions to the restrictions on enforcing evictions: first, where the claim is against trespassers who are persons unknown, and secondly, where the order for possession was made wholly or partly on the grounds of antisocial behaviour or nuisance, false statements, domestic abuse in social tenancies, substantial rent arrears equivalent to nine months’ rent that predate 23 March 2020, or the death of a tenant where the enforcing agent attending the property is satisfied that the property is unoccupied. The Government believe it is important that there is a clear, uniform and transparent process for establishing whether an exemption to the ban on evictions applies. For that reason, the instrument contains a requirement for the court to be satisfied on a case-by-case basis that an exemption applies.
The measure will be in force until 11 January. New rules require that all bailiffs must give 14 days’ notice of an eviction, which means that in most cases evictions will not resume anywhere in England until 25 January at the earliest. We continue to keep the position regarding the enforcement of evictions in local tiers under review, following the expiry of the national restrictions over the midwinter period. I know there has been significant interest in the House in the effect of removing tenants’ protection from eviction, which was provided by the stay on possession proceedings between 27 March and 20 September this year. Concern has also been expressed by hon. Members about the impact of these restrictions on the rights of landlords, who are dealing with difficult situations in which there is no reasonable alternative to possession proceedings.
The statutory instrument also set out a nationwide prohibition on enforcement agents taking control of goods inside residential properties while the national restrictions are in place. The measure did not prevent enforcement agents from taking other steps to enforce debts and fines under the taking control of goods procedure, including making contact via remote means such as telephone; visiting, but not entering, properties; taking control of goods located outside homes or on the highway; and enforcement at business premises. The Government believe that such steps may be safely undertaken in line with the Government’s published covid-secure guidance for enforcement agents using the taking control of goods procedure. The Government’s view, therefore, is that this policy strikes a proportionate balance between protecting against the risk of transmission and allowing the continuation of the administration of justice.
Forgive me for one moment as I find the next part of my speech.
Thank you for that kind offer.
I will close by saying that the courts remained open throughout the national restrictions in November. The court rules and procedures introduced in September will ensure protections for both tenants and landlords. For example, landlords are required to send the court information about the impact that the pandemic has had on their tenant; a new review stage has been introduced so that tenants can access legal advice; and landlords are required to reactivate any existing claims that were in the system before 3 August. The Government have published comprehensive new guidance for landlords and tenants to explain all these new arrangements and their impact on the court possessions process.
Our approach strikes the right balance between prioritising public health and supporting the most vulnerable renters, while ensuring that landlords can access and exercise their right to justice. Landlords can action possession claims through the courts, but evictions will not be enforced apart from in the most serious cases. This instrument provides tenants with protection from eviction, ensuring that vulnerable tenants are not forced from their home at a time when public and local authorities may be dealing with the unusual level of increased demand on services. I therefore commend the regulations to the Committee.
It is a pleasure to serve under your chairmanship, Sir David, on this cool Christmas evening.
I will start with the aspects of the instrument that the Opposition consider positive. The measures in the regulations will come as a relief to people up and down the country. No one wants to see people evicted from their homes in the middle of a deadly pandemic. As we are all too aware, many have found themselves in perilous financial situations this year and struggled to pay their rent from week to week. The Opposition think it essential that none of those struggling households—those in both the private and socially rented sectors—are forced out of their homes this Christmas. It would be not only deeply immoral but hugely dangerous and counterproductive to deny people the safety of their home while the virus persists.
In March, the Secretary of State for Housing, Communities and Local Government promised that
“no one should lose their home as a result of the coronavirus epidemic”
and the Opposition agreed wholeheartedly. During the first wave, the Government attempted to live up to that promise by introducing a nationwide ban on evictions. Following pressure from the Opposition, they extended the ban twice. In the run-up to the ban ending, the shadow Secretary of State for Housing, my hon. Friend the Member for Bristol West (Thangam Debbonaire), repeatedly warned that the Government would have to extend the ban yet further. The Housing Minister assured her
“we are moving out of the worst of the epidemic”—[Official Report, 22 July 2020; Vol. 678, c. 2170.]
but all the evidence at the time showed and subsequent events have shown that the Opposition were, unfortunately, correct.
It was scandalously and deeply myopic of the Government to lift the evictions ban just when the evidence was showing we were heading into a second wave. Just when renters and homeowners needed protection the most, the Government decided to take it away. The Government went against the advice of the Opposition, the chief medical officer and various other public health bodies, who all warned of a rise in covid infections if they forced people into homelessness or serious overcrowding. If they had listened to that advice, the original ban on evictions still be in place and these regulations would not have been necessary.
Let us be crystal clear: the regulations are not a ban on evictions; they simply prevent enforcement agents from carrying them out. They prevent enforcement agents from physically taking possession of a home, but they do not stop eviction notices from being sent to homes. Meanwhile, the courts remain open to hear possession claims. After a year of unimaginable hardship, eviction notices will be landing on thousands of doormats this Christmas, reminding people that they could be homeless when January comes and the effect of these provisions ceases. That is simply scandalous. What is more, it could so easily have been avoided had the Government chosen to follow the Opposition’s advice and reinstated a national ban on evictions.
The regulations provide some protection to tenants who would otherwise have nothing, so we will not oppose them today, but they will only delay, rather than prevent, the looming evictions crisis. We need a long-term plan to ensure that nobody loses their home because of coronavirus. That starts with early planning. I would therefore appreciate the Minister answering some questions.
What are the Government doing to prevent illegal evictions, reportedly up by 50% since the beginning of the pandemic? Do the Government recognise that figure? Do they collect data on illegal evictions? I cannot tell whether they do. What are they doing to ensure that local authorities have the financial resources to pay vital discretionary housing payments to those who are struggling? Will the provisions of the regulations continue in tier 2 and tier 3 areas after 11 January, or will people in those areas be left high and dry, just as they were in September?
I turn to the second aspect of the regulations: the taking of goods. During the first lockdown, the Government passed legislation to prevent enforcement agents from entering properties and taking control of goods. Following the end of the first national lockdown, the restrictions on taking goods were lifted, just a few days before the second wave took hold. As with the lifting of the eviction ban, that was a stunningly short-sighted decision which Labour vehemently opposed.
Following the second national lockdown, from 5 November until 2 December, the Government legislated to ban enforcement agents from taking control of goods inside residential properties. Unfortunately, that ban was only effective for the time the national lockdown was in force. Given that the national lockdown has now come to an end, bailiffs will be permitted to enter homes in tier 1 areas and conduct visits to homes in tier 2 and 3 areas. The current arrangement is purely a voluntary one, between the Lord Chancellor and the Civil Enforcement Association. It could be fudged or broken at any time. We believe that it is simply wrong that, through a lack of legislation, the Government are placing many clinically vulnerable people at increased risk of catching covid as a result of allowing bailiffs to visit their homes. That is in stark contrast to the Government’s approach to the enforcement of evictions. Why does the Minister think it is necessary to stop enforcement of evictions but not necessary to prevent enforcement agents from visiting homes?
During a deadly pandemic, especially at Christmas, enforcement visits are both dangerous and unnecessary. They also force those who are already struggling into even further debt, as each visit by an enforcement agent adds £235 to a person’s debt, even if the purpose of the visit is not achieved. At a time when the Government should be focusing on economic recovery, these visits will force vulnerable people into further, deeper debt.
This Christmas will be hardest that many people experience, even without the additional fear of a knock on the door from the bailiffs. With that in mind, will the Minister answer the following questions? Why is the Government’s approach to the taking of goods so different from their approach to enforcing evictions? Will the Minister commit to passing legislation to ban bailiffs from visiting properties until at least January? If not, will he at the very least legislate to prevent agents from entering homes in tier 2 and tier 3 areas? Finally, will he commit to implementing the recommendations of the Justice Committee’s April 2019 report and appoint an independent industry regulator?
I thank the hon. Member for Hove for his helpful observations.
The hon. Gentleman asked about illegal evictions. If an eviction is illegal, it is absolutely right that proper action to be taken. It is a cruel and frankly wicked thing to evict someone illegally, without due process. I am proud that this Government have been increasing resources for policing. If there is a breach of the law, there will be more police officers available to take action where that is appropriate.
The hon. Gentleman asked about local authorities and their funding to assist people with local housing allowance. I am glad that he raised that, because he is right: local authorities across the country, including the one in my constituency, face additional pressures. That is why the Government have allocated £4 billion to assist local authorities. On the specific point about local housing allowance, there will be an additional £180 million to allow councils to make discretionary housing payments to individuals who are finding it difficult to make rent payments. In fact, a total of £700 million will be allocated this year, with more next year, also to tackle homelessness and rough sleeping.
As the Committee will be aware, councils have also been provided with funding to support hardship funds, so if individuals have difficulty meeting council tax payments, they can apply to their local authority for assistance. A huge amount of money and will is being put behind trying to assist people in difficult circumstances to meet their financial obligations. All that stands above and apart from the other measures in place, such as furlough and the self-employment income support scheme, to ensure that people have money going into their pockets to meet their obligations.
The hon. Gentleman asked about the distinction between eviction and taking possession of goods. Respectfully, I would say there is a clear distinction. When individuals knock on a door seeking to evict someone from the home they live in, that is manifestly different from taking possession of goods inside the home. It is right that we ensure that each issue is taken on its merits and in the round. In this House we are of course mindful of the impact on the people behind the door, but equally we have to remember that there are those who have the right to access the justice procedure to ensure that debts are honoured and obligations met. It is right that we consider not a one-size-fits-all approach, but an approach that takes account of the implications of the enforcement action. There is no similarity between removing a possession and removing a home.
Finally, the hon. Gentleman asked about the proper question that the Justice Committee raised with respect to independent scrutiny of enforcement agents. The Government will return to that matter in due course.
Question put and agreed to.
Tobacco Products Duty (Alteration of Rates) Order 2020
The Committee consisted of the following Members:
Chair: Clive Efford
† Badenoch, Kemi (Exchequer Secretary to the Treasury)
† Bhatti, Saqib (Meriden) (Con)
† Carter, Andy (Warrington South) (Con)
Huq, Dr Rupa (Ealing Central and Acton) (Lab)
† Johnson, Gareth (Dartford) (Con)
Lewis, Clive (Norwich South) (Lab)
Lloyd, Tony (Rochdale) (Lab)
† Loder, Chris (West Dorset) (Con)
Mahmood, Shabana (Birmingham, Ladywood) (Lab)
† Mumby-Croft, Holly (Scunthorpe) (Con)
† Oppong-Asare, Abena (Erith and Thamesmead) (Lab)
† Richardson, Angela (Guildford) (Con)
† Rutley, David (Lord Commissioner of Her Majesty's Treasury)
† Smith, Jeff (Manchester, Withington) (Lab)
Thompson, Owen (Midlothian) (SNP)
† Vickers, Martin (Cleethorpes) (Con)
† Williams, Craig (Montgomeryshire) (Con)
Nicholas Taylor, Committee Clerk
† attended the Committee
Third Delegated Legislation Committee
Monday 7 December 2020
[Clive Efford in the Chair]
Tobacco Products Duty (Alteration of Rates) Order 2020
I beg to move,
That the Committee has considered the Tobacco Products Duty (Alteration of Rates) Order 2020 (S.I. 2020, No. 1256).
The order increases the excise duty rates on tobacco products. The duty charged on all tobacco products will rise in line with the tobacco duty escalator, with an additional 4% rise for hand-rolling tobacco and an additional 2% rise for the minimum excise tax. As hon. Members will recall, the Government committed in the spring Budget to maintaining the tobacco duty escalator, which increases tobacco duties by 2% above retail prices index inflation each year until the end of the Parliament. The order therefore specifies that the duty charged on all tobacco products will rise by 2% above RPI inflation. In addition, duty on hand-rolling tobacco will rise by an additional 4% to 6% above RPI inflation. The order also specifies that the minimum excise tax—the smallest amount of duty to be paid on a pack of cigarettes—will rise by an additional 2% to 4% above RPI inflation.
Let me take the opportunity to provide some context on the steps that we are taking and to explain the rationale behind them. The UK already boasts comprehensive and globally admired tobacco control legislation that has led to a decline in smoking rates. However, too many people still class themselves as smokers. Smoking remains the biggest cause of preventable illness and premature deaths in the UK, killing approximately 100,000 people a year and about half of all long-term users, and the country spends large amounts on covering the health costs of smoking. All those factors mean that we need to continue to encourage more people to kick the habit. We have already set out plans to reduce the number of smokers from 14% of the population to 12% by 2022, and we have announced that we aim to curb smoking once and for all by 2030 in England.
We are also taking more measures to stamp out the underground trade in illicit tobacco. Hon. Members may have seen the Government’s recent consultation on tougher penalties for tobacco tax evasion, including proposals for £10,000 fixed penalties and escalating fines for repeat offenders. The Government have also committed to strengthening trading standards and Her Majesty’s Revenue and Customs so that they can even better combat the illicit tobacco business. That work includes creating a UK-wide HMRC intelligence-sharing hub.
The measures that I have outlined will all play their part in helping to reduce the prevalence of smoking. However, all the evidence shows that increasing the cost of tobacco products through taxation is also an important deterrent. Indeed, the World Health Organisation has found significant increases in the taxes on and the prices of tobacco products to be
“the most cost effective measure to reduce tobacco use.”
That is why we included a commitment in our recent tobacco control plan and our prevention Green Paper to continue our policy of maintaining high duty rates for tobacco products.
In the absence of a Finance Bill, we have decided to implement the increases to tobacco duty rates that I have outlined via the order. I acknowledge that a statutory instrument is not the usual mechanism for increasing tobacco duties. However, hon. Members may recall that such a method was used to amend rates in 2008, so it is not without precedent. The order will protect up to £100 million of revenue—money that we would forgo if duty rises were delayed until the spring.
These measures constitute additional protection for public health, while providing a boost to the public purse. I therefore commend the order to the Committee.
It is nice to see you chairing the sitting, Mr Efford. On behalf of the shadow Treasury team, I welcome the opportunity to address the order, which will increase the rates of excise duty on tobacco products to take account of inflation and the Government’s commitment to the tobacco duty escalator, as the Minister outlined. In the 2020 spring Budget, the Government announced that they would continue with the tobacco duty escalator in this Parliament, even though, as of 1 January next year, the UK would be well within its rights to depart from the European Union directives that presently cover the structure of tobacco duties.
The Government’s justification for this instrument and for maintaining high duty rates on tobacco is that they are seen as an established tool to reduce smoking and to ensure that tobacco duties continue to contribute to the Government’s revenues. The official Opposition recognise and welcome instruments that support the public to make healthier choices and help the UK towards being smoke-free by 2030. However, this instrument feels a little blunt. It will place the burden of public health on the shoulders of individuals who are most likely to be in the grip of, and paralysed by, addiction.
The Government’s justification for this instrument states that the higher rates of tobacco duty will be welcomed by health lobby groups. The shadow Cabinet has been working closely with experts from the health sector, who have told us what they would welcome. Year on year, the health sector has listened to the Government’s statements about prevention being better than cure, and we are waiting for the Government to properly and sustainably fund the services that prevent ill health. Even before the pandemic hit the UK, local public health services were struggling to keep up with the growing demand, and health inequalities were rising.
This instrument will place duties on tobacco and will support the public purse. However, there has been a disproportionate increase in the duty on hand-rolling tobacco, by over 7%, in comparison to a little over 3% on all other tobacco products, including cigars. I am no smoker, so I wonder whether the Minister can explain the rationale behind that.
The Government have cut the public health grant by more than a fifth—22% in fact—since 2015-16, despite a growing and urgent need for investment in public health and prevention. The public health grant funds local authorities to deliver functions and services that promote health and prevent ill health in the most deprived areas. Those areas have poorer health outcomes, and therefore have the greatest need for local public health activity and funding, but they have had the greatest reduction in spending.
The Minister mentioned some data from the World Health Organisation. Data from Cancer Research UK shows that cuts in the poorest areas have been around six times greater than in the least deprived, further compromising the delivery of equitable care and the Government’s levelling-up agenda. In 2020-21, the public health grant was valued at £3.2 billion, which was about £80 million higher than the previous year’s grant. This year’s spending review said that local authority spending through the public health grant will continue to be maintained, which suggests that it will not get a real-terms increase. The Government must deliver an increase, with a sustainable, long-term funding settlement for public health in England. Based on analysis by the Health Foundation, at least an extra £0.9 billion per year is needed to restore the cuts made in 2015-16. However, a greater level of investment is also needed to support a greater focus on preventing ill health and reducing health inequalities.
It is true that comprehensive tobacco control functions that reduce smoking uptake and support smokers to quit are essential to achieve the Government’s ambitious smoke-free commitment by 2030. Despite political support for tobacco control remaining strong, local investment has decreased over recent years. Experts say that among the local authorities that still had a budget for stop smoking services, 35% had cut it between 2018-19 and 2019-20—the fifth successive year in which more than a third of local authorities had to cut that budget. Can the Minister inform me what assessment has been made of the effects of public spending cuts on the provision of those services?
To add weight to the stats that I have mentioned, more than three quarters of local authorities have reported that the biggest threat to their tobacco control budgets is funding cuts. In 2019, local smoking cessation services, which offer people the best chance of quitting for good, were universally available only in just over half of local authorities. The order does not recognise or take into account the sheer scale of the problem or the fact that smoking, like all other addictions, requires a thorough, in-depth, holistic public health approach. Smokers need to be supported to quit, not punished for dependency issues.
The economic benefits from treating smoking with a public health approach and as a preventable disease are also significant, which further strengthens the case for investing now in local public health and prevention to prevent significant economic costs in the future. In England alone, smoking is estimated to cost society £12.5 billion a year, which I would say is a substantial amount of money.
Smoking rates in England are at an all-time low, which shows the success of initiatives brought in by successive Governments to encourage the decline of smoking. However, I do have concerns about recent Government actions that could work against those measures. It is greatly concerning that the Government recently made the decision to axe Public Health England, which has played a crucial role in smoke-free initiatives, including strong regional delivery of evidence-based local action. Given that the likelihood that someone will smoke is four times higher in the most deprived areas of England, it is essential that that local work is continued as part of a UK-wide strategy to become smoke-free by 2030. I would be keen to hear from the Minister how, alongside the order, the Government plan to ensure that stop smoking campaigns can continue to be delivered in the areas most affected by smoking.
As we know, smoking still causes more than 70,000 deaths per year. I am pleased that the Government and the Opposition are on the same page in believing that that cost in human life is quite frankly unacceptable. I know that, for that reason, my colleagues in the shadow health team and quite a number of colleagues across the House have been supportive of the order and other measures to reduce smoking. However, the approach needs to be improved so that it does not hit those who are already economically deprived harder than those who can shoulder an increase in tobacco duties. I am eager for us to work closely together to ensure that the Government achieve their smoke-free target by 2030 and to work with the NHS to help people to quit smoking.
I thank the hon. Lady for her contribution to the debate. She asks why the rate for hand-rolling tobacco and the minimum excise tax have been increased more than for cigarettes; the answer is that the additional rate increase for hand-rolling tobacco supports the Government’s objective to reduce smoking, which I know the Labour party shares. Narrowing the taxation gap between hand-rolling tobacco and cigarettes, which are taxed at a much higher rate, makes it less likely that cigarette smokers will trade down to hand-rolling tobacco to avoid duty rate rises. This approach is supported by public health groups.
We all share the same ultimate goal: to protect public health by deterring people from taking up smoking and by encouraging smokers to quit. I think the hon. Lady’s questions about doing more for public health would be best answered by the Department of Health and Social Care, which owns this policy area. However, as I outlined earlier, this country benefits from some of the most advanced anti-smoking policies in the world, and I am glad to say that those measures have succeeded in dramatically lowering smoking levels in recent years, as the hon. Lady acknowledged. That should also answer her question about the impact of funding changes: the fact is that smoking is reducing despite any funding changes, so we think we have made the right decisions, although we all acknowledge that we cannot sit on our laurels—there is always more to do.
A significant proportion of the population still smokes—a habit that, as we all know, has immense health and economic costs. As I mentioned, we are in the process of introducing a wide range of measures that will further help us to bring down the number of smokers, and I am sure that the hon. Lady will see many of those policy changes in due course. However, the evidence clearly shows that taxation also has an important part to play in turning the tide against tobacco; it is not just about health policy.
The order will ensure that, in the absence of a Finance Bill this year, we are still able to use the tobacco duty escalator to achieve its goal. As well as safeguarding public health, it will help us to protect the public purse. It will allow us to bring in up to £100 million of revenue that would have been forgone if duty rises had been delayed until the spring. I am very appreciative of the support across the House for this legislation, which will help us to stamp out smoking and build a cleaner, healthier future for the people of this country.
Question put and agreed to.
Financial Assistance to Industry
The Committee consisted of the following Members:
Chair: Mark Pritchard
Afolami, Bim (Hitchin and Harpenden) (Con)
† Brown, Alan (Kilmarnock and Loudoun) (SNP)
† Cartlidge, James (South Suffolk) (Con)
† Fletcher, Mark (Bolsover) (Con)
† Furniss, Gill (Sheffield, Brightside and Hillsborough) (Lab)
Hendrick, Sir Mark (Preston) (Lab/Co-op)
† Hollinrake, Kevin (Thirsk and Malton) (Con)
† Johnston, David (Wantage) (Con)
Keeley, Barbara (Worsley and Eccles South) (Lab)
McDonagh, Siobhain (Mitcham and Morden) (Lab)
† Mayhew, Jerome (Broadland) (Con)
† Pawsey, Mark (Rugby) (Con)
† Pennycook, Matthew (Greenwich and Woolwich) (Lab)
† Russell, Dean (Watford) (Con)
† Solloway, Amanda (Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy)
† Tarry, Sam (Ilford South) (Lab)
† Tomlinson, Michael (Lord Commissioner of Her Majesty's Treasury)
Dominic Stockbridge, Committee Clerk
† attended the Committee
Fourth Delegated Legislation Committee
Monday 7 December 2020
[Mark Pritchard in the Chair]
Financial Assistance to Industry
Before we begin, the Chairman of Ways and Means has asked me to remind Members to observe social distancing and to sit only in places that are clearly marked. I think everybody is doing that, so very well done. Hansard colleagues to my left would be most grateful if Members could send their speaking notes to firstname.lastname@example.org.
I beg to move,
That the Committee has considered the motion, That this House authorises the Secretary of State to undertake to pay, and to pay by way of financial assistance under section 8 of the Industrial Development Act 1982, sums exceeding £30 million and up to a total of £300 million in respect of compensation for indirect costs of the UK Emissions Trading System or the Carbon Emissions Tax and Carbon Price Support mechanism in each case to British Steel Ltd; Celsa Manufacturing (UK) Ltd; CF Fertilisers UK Ltd; DS Smith Paper Ltd; INEOS Chemical Grangemouth Ltd; INEOS ChlorVinyls Ltd; Kimberly Clark Ltd; Outokumpu Stainless Ltd; Palm Paper Ltd; Runcorn MCP Ltd; SABIC UK Petrochemicals Ltd; Tata Steel UK Ltd; and UPM-Kymmene (UK) Ltd.
It is a great pleasure to serve under your chairmanship, Mr Pritchard. The current scheme to compensate certain energy-intensive industries for indirect emissions costs arising from the EU emissions trading scheme expires at the end of 2020. Ministers in the Department for Business, Energy and Industrial Strategy have agreed to extend the compensation schemes in line with the current framework for a further year, to the end of the next financial year. Under section 8 of the Industrial Development Act 1982, we seek the House of Commons’ approval to pay compensation in excess of £30 million to individual businesses.
The UK will announce either a United Kingdom emissions trading scheme or a carbon emissions tax as a successor to the EU ETS. That means that the motion agreed by the Commons in 2014, providing approval to spend more than the limit in section 8 of the Industrial Development Act, will no longer be valid. That is because the UK has left the EU and will no longer be part of the EU ETS. We are therefore tabling a motion to seek the Commons’ approval to ensure that BEIS can continue to compensate businesses for more than £30 million of indirect costs from the UK ETS or carbon emissions tax and carbon price support mechanism.
Energy-intensive sectors that are eligible for BEIS relief schemes employ around 350,000 workers, and they have a gross value-added of £28.5 billion, or 2% of the UK economy. Their turnover is around £134 billion, and in 2018 their exports totalled around £93 billion, which is 27% of total UK exports. Carbon pricing policies create a cost differential between the UK and other countries, and that increases the risk of carbon leakage. Carbon leakage could occur if, for reasons of cost related to climate policies, businesses were to transfer production or reallocate investment to other countries that have lower carbon pricing policies. That could lead to an increase in global greenhouse gas emissions. The Government have therefore been compensating certain energy-intensive industries for the indirect emissions costs arising from the EU ETS and the carbon price support mechanism since 2013 and 2014 respectively.
In their 2011 autumn statement, the Government announced that, to ensure that manufacturing was able to remain competitive during the shift to a low-carbon economy and to minimise carbon leakage, they would compensate key electricity-intensive businesses to help to offset the indirect emissions cost of the carbon price and the EU ETS. Cost compensation should remain as long as there are differences in low-carbon policy costs between the UK and international competitors. The Government should ensure that businesses can plan on the basis that that will be the case, while keeping the precise coverage level and conditionality of compensation and exemptions under review. The main beneficiaries are certain energy-intensive industries, particularly companies in the steel, paper and pulp chemical sector. The compensation is paid from the BEIS budget.
As I have mentioned, section 8 of the Industrial Development Act requires approval by a resolution of the House of Commons for support in excess of £30 million under any one project. In 2014, the Commons approved a motion to increase that limit to £300 million for 13 companies in respect of compensation for the EU ETS and carbon price floor. As we will move to a new scheme—a UK ETS or carbon emissions tax—from 1 January 2021, we are seeking approval from the Commons again.
Without new approval from the House of Commons, my Department would not be permitted to compensate businesses from 1 January 2021. Given the pressure facing businesses from covid-19, preparations for the end of the transition period and the continuation of relatively high UK industrial electricity prices, Ministers have agreed to the continued operation of the compensation scheme for a further year—until the end of the financial year 2021-22.
We will revise the schemes in early 2021 to assess whether—and if so, how—to continue the compensation scheme for the longer term. By that time, we will have more clarity about our future relationship with the EU carbon pricing policy. The UK’s subsidy control regime has broader Government objectives, such as the delivery of the covid-19 response and net zero commitments.
The Government recognise that energy-intensive industries need to play their part in reducing emissions, and we have introduced various policies to help them decarbonise. In the Budget of 2018, the Government announced £315 million for an industrial energy transformation fund to support industrial energy efficiency and decarbonisation projects, to bring energy costs down for industry.
I thank my hon. Friend for that intervention; if I may, I will come to that point in my closing remarks.
As set out in our 10-point plan for a green industrial revolution, our aim is for the UK to develop 5 GW of low-carbon hydrogen production capacity by 2030; that could see the UK benefit from about 8,000 jobs across our industrial heartlands and beyond. It will be supported by a range of measures, including a £240 million net zero hydrogen fund. The financial system outlined in the motion will be of huge benefit to the UK energy-intensive industries most at risk of carbon leakage. It is imperative that we continue to support those industries, which are so vital to the UK economy. I am assured that section 8 of the Industrial Development Act 1982 is the appropriate means by which to make such payments, and I commend the motion to the Committee.
It is a pleasure to serve under your chairmanship, Mr Pritchard.
Let me say at the outset, for the purposes of clarity, that the Opposition support the objective that underpins this motion—namely, the need to minimise the risk of carbon leakage by taking steps to ensure that energy-intensive industries are not put at a competitive disadvantage as a consequence of the cumulative impact of carbon pricing on industrial electricity prices.
It is obviously important that UK manufacturing should be able to remain competitive during the transition to a low-carbon economy, and we recognise that there is a need to continue to provide compensation for the indirect emissions cost of whatever carbon pricing policy replaces the EU emissions trading system. For that reason, we will not be opposing the motion this afternoon.
I would, however, like to take the opportunity to raise with the Minister two important questions that relate directly to the motion under consideration. The is about what carbon pricing policy will replace the EU emissions trading system. To put it another way: in respect of what arrangement do the energy-intensive industries that we are discussing require compensation during the next financial year?
As I have said to the Minister on previous occasions, we cannot run the risk of a dysfunctional carbon pricing system in the year we host the critical COP26 UN climate summit. As the Committee will know, only 24 days—eight sitting days—of this parliamentary term now remain until the transition period ends, and with it the UK’s participation in the EU ETS. Yet the Government have still not announced whether a stand-alone UK ETS or a carbon emissions tax will operate from 1 January should a linking agreement with the EU ETS not be negotiated and put in place by that date. Surely, the Minister cannot believe it is fair that the emitters in question still have no idea what arrangements they will be operating under in just three and a half weeks’ time. My understanding is that a decision has been on the Prime Minister’s desk since late last month. If that is the case, what on earth is stopping the Government making clear to those affected what fall-back carbon pricing arrangement will operate in the UK from 1 January should the linked UK-EU scheme not materialise from the negotiations in the coming days and weeks?
In all candour, I have no expectation of getting an answer today from the Minister, but I would be grateful if she could at least acknowledge that the Government recognise that they owe those operators clarity on this issue as a matter of some urgency. I would also be grateful if she could clarify how her Department has been able to estimate that the compensation budget for the next financial year will stand at £140.6 million. Although we know that we have a carbon price floor in place from 1 January, we still have absolutely no confirmation of what will replace the EU ETS.
The second issue I want to raise concerns the long- term arrangements for addressing carbon leakage and ensuring that our energy-intensive industries remain competitive as we accelerate the pace of emissions reduction. We accept that compensation of the kind we are authorising today is necessary, but to avoid the cost of such compensation spiralling over the long term, as the price of carbon is increased, there must be sufficient long-term support to green the industries in question. After all, as the Minister will know, many if not all of the energy-intensive industries covered by the motion will not only benefit from compensation for the indirect emissions cost of carbon pricing, but will continue to benefit from reduced costs in respect of climate levies. They are, in short, in a relatively privileged position relative to other less energy-intensive industries. Therefore, as we accelerate efforts to achieve net zero, there will have to be greater use of conditionality to ensure that the financial support provided to compensate these industries is balanced by measures to ensure that their carbon intensity is steadily reduced.
I note that a review and a consultation in early 2021 in relation to the compensation scheme have been mentioned, and the Minister touched on that in her remarks, but I would be grateful if she could reassure the Committee that the Government recognise the limits of the compensation mechanism in question over the long term as the price of carbon rises, and that they accept that more will need to be done beyond the schemes she touched on to accelerate the pace of decarbonisation in these industries, not least to manage the costs of the current scheme going forward.
The hon. Gentleman arrived literally 30 seconds ago—11 minutes into the discussion.
I understand that, but on this occasion I am going to call the Minister.
I thank hon. Members for their contributions to the debate. The discussions we have had highlight the value of energy-intensive industries such as steel, chemicals, plastic and cement to the UK.
In response to my hon. Friend the Member for Thirsk and Malton, we do recognise that the UK’s industrial electricity costs are currently higher than those of our competitors. That partly reflects how the costs of electricity systems are distributed across household and industrial customers. For example, German industrial users pay lower electricity prices than UK industrial users, but German households pay higher electricity prices than UK households.
In response to the hon. Member for Greenwich and Woolwich, the operations are under negotiation. Of course we have a long-term commitment to climate change, as indicated in our 10-point plan. The Government are determined to continue to minimise the risk of carbon leakage to help businesses improve their productivity and competitiveness as part of our industrial strategy. Furthermore, we will work with our partners in industry to start deploying hydrogen and carbon capture usage and storage technologies.
At the same time, it is important that we continue to mitigate the cumulative impact of energy and climate change policy costs on energy prices for energy-intensive industries as we make the transition to the low-carbon economy. The Government have taken steps to reduce the impact of energy and climate change policies on industrial electricity prices for key energy-intensive industries in sectors such as steel, chemicals, cement, paper and glass. Between 2013 and 2019, total relief to energy-intensive industries for electrical policy costs was around £1.5 billion to over 220 businesses across the UK. We therefore seek approval to pay sums exceeding £30 million and up to a total of £300 million in respect of compensation for indirect costs of the UK emissions trading system, or the carbon emissions tax and carbon price support mechanism, in each case to 13 companies. I commend the motion to the Committee.
The Minister has sat down and has not given way, so I have to move on.
Question put and agreed to.